Insurers are not being as strategic as they could be to reach the millions of people who are choosing a health insurance policy for 2017.
Even as former President Bill Clinton derides Obamacare as "the craziest thing in the world," healthcare plans are gearing up to spend huge sums on marketing and advertising for the open enrollment period beginning in November.
Whether they are spending all that money wisely is uncertain.
Clinton was campaigning for his wife in Flint, Michigan on Monday when he criticized the Affordable Care Act as unworkable for many consumers.
"You've got this crazy system where all of a sudden 25 million more people have healthcare and then the people are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half," he said. "It's the craziest thing in the world."
Clinton is not the only one who thinks so, with complaints about high premiums and deductibles at the top of any consumer survey regarding the Affordable Care Act.
Healthcare plans have to address that complaint during the two months they have to reach millions of people choosing a policy for 2017, but many are not making the most of their marketing and advertising budgets, according to Steve Yi, CEO of MediaAlpha, which helps insurers attract the right consumers.
"The plans are anticipating a high volume of searches for insurance quotes in the upcoming enrollment period, approaching the volume they saw in the early open enrollment periods," Yi says.
"That is an opportunity, but carriers can be a lot more careful about targeting during this period than most have been in the past."
Targeting Consumers
Insurers should focus on finding the right consumer, Yi says, and that requires deep analytics and targeting based on information the consumers provide when searching for coverage, such as family background, income levels, ZIP code, number of family members, and age.
That kind of data sometimes is collected when a consumer uses a health insurance quote search online, making that avenue more efficient than banner ads, he says.
Many insurers are new to consumer-level marketing and do not take advantage of the segmentation that is available, Yi says. That can lead to more of a shotgun approach that tries to reach a large volume of consumers rather than focusing on the smaller segment that the insurer really wants to recruit.
Profitability concerns have forced many insurers to cut back on marketing and advertising even when they desperately need new customers, Yi says. In addition, consumers will find fewer choices because of the number of insurers who have pulled out of some markets.
"There is going to be a bit of mismatch between the consumer demand we see in this open enrollment period and the number of carriers who are going to be marketing actively during this period," Yi says.
"We do anticipate a high number of searches and people looking for different alternatives, but we're seeing the carriers' budgets and marketing pulled back."
Online Inexperience
Insurers are not being as strategic about cutbacks as they should be, Yi says. Their inexperience with online marketing leaves many not knowing how to selectively pull back marketing dollars in some areas while investing more heavily in other areas, he says.
"In addition to knowing where you should go to reach those consumers, it also is about tailoring your web site's user experience to the specifics you know about that segment of the population. Whether someone is subsidy-eligible, their ZIP code, who they're covered with now, all of those things and more can determine what their end experience should be when a search directs them to your web site."
"There is a lot of information that the insurers can use to more effectively target their budgets, even if they are cutting back," Yi says.
The Department of Justice has revealed that the two health insurers are accusing each other of breaching their agreement to merge in a $48.2 billion deal.
With the Department of Justice digging deep to find evidence of antitrust and the bride and groom bickering, the chances that the two biggest health insurers in the country will unite as one are dwindling.
Anthem and Cigna face a formidable opponent in the Department of Justice, and now it seems they can't along with each other either.
Anthem stands to lose big if their deal falls apart, with the merger agreement requiring that Anthem pay Cigna a $1.85 billion breakup fee if they part ways. If they stay together but the court blocks the merger, however, Anthem may be off the hook.
The DOJ has revealed that the two insurers are accusing each other of breaching their agreement to merge in a $48.2 billion deal. The spat is detailed in documents filed in the District Court for the District of Columbia, where the DOJ is suing to block the mega merger.
Anthem and Cigna were both unhappy about the dispute being released to the DOJ, arguing that the document should fall under the common interest rule, which protects the communications between two parties that are jointly defending themselves.
The court disagreed, pointing out that the common interest rule does not apply to "adversarial communications."
"Such communications are not in furtherance of a joint defense strategy, and Defendants cannot have a joint legal interest in accusing each other of breaching a contract," the court said.
The government's interest in the correspondence between the two companies shows how hard it is working to block the merger, says Randal Schultz, a partner at the law firm of Lathrop & Gage and chair of the firm's Healthcare Strategic Business Planning Practice group.
But the question of whether the companies are breaching their own agreement is not really germane to the DOJ's antitrust case, he says.
A Smoking Gun?
"Why would [DOJ] need those documents unless [it] think[s] there's some kind of smoking gun in those documents that says, 'we're really doing this because we can generate a whole bunch of extra money and increase prices because of our size'?" Schultz says.
The DOJ was essentially arguing for the release of documents that it said would be of no use to it, he explains.
If the documents are only about the companies fighting with each other and not relevant to their joint defense, as the court decided, it follows that the DOJ would find nothing to use against the insurers. Nevertheless, Schultz suspects that the DOJ will press the strategy, especially now that it is emboldened by success.
In some circumstances it is justified to allow the prosecution access to communication between the joint defendants, and the DOJ is hoping that just one of those times there will be something useful. Even though there shouldn't be.
It's Complicated
"It's a very complicated question from a discovery perspective," he says. "It's going to pit the joint defense concept against the government's right to access information in a deposition where the discussions between the two parties could be directly relevant to the subject of the litigation."
Schultz does not expect the merger will happen.
If the government successfully blocks the merger, the companies are likely to continue arguing about who failed to honor their agreement and who owes the other a lot of money, he says.
Either party, however, could respond by saying that the DOJ's efforts to block of the merger made their agreement invalid.
"You can't make a contract to do something illegal. You and I can't sign an agreement to go rob a bank and then expect a court to uphold the terms of that agreement," Schultz explains.
"If the court blocks the merger because it would violate antitrust laws, that means you couldn't have a contract to engage in anticompetitive activities in the first place. So the agreement can't be enforced."
Lower healthcare literacy has been linked to higher utilization, higher rates of hospitalization, and less use of preventive services, says one observer.
As health insurers continue complaining about overutilization and their customers complain about high premiums and deductibles, one analyst says the root of both group's dissatisfaction is that the health plans are not adequately educating consumers.
Health plans put ever-increasing amounts of responsibility on consumers, but 80% of Americans spend less than an hour researching their benefits options before choosing a plan, says Kim Buckey, vice president of client services at DirectPath, a strategic employee engagement and healthcare compliance company.
In addition, many consumers are not fluent in the appropriate definitions, she says.
"No one is paying enough attention to this," Buckey says. "The level of healthcare literacy in this country is abysmally low, with as few as 12% of Americans capable of really understanding the healthcare system, their health, and how their coverage applies. Lower healthcare literacy has been linked to higher utilization, higher rates of hospitalization, less use of preventive services, and of course those lead to higher healthcare costs for insurers and everyone else."
Most consumers take a passive approach and just avoid the issue of healthcare insurance as much as possible, Buckey says, which accounts for the huge percentage of consumers rolling over their health plans every year regardless of whether that plan still suits their needs.
Employers and insurers would both benefit from pairing the insured with benefits educators who help employees understand their options, she says.
Confused Consumers Make 'Poor Decisions'
"When they are presented with some of these new plans with high deductibles and options that they don't really understand, they just get confused and end up making poor decisions," Buckey says.
"There are people out there who think that with a high deductible plan they have to pay the full deductible if they see a doctor, so they think if they go in for a checkup or preventive care they're going to have to pay $2,000."
Insurers are missing the opportunity to educate consumers about the need for preventive care and options that can control costs for them but also the health plan, like going to an urgent care clinic or using telemedicine instead of going to an emergency room, she says. Most people do not know that they can shop around for the best price on prescriptions, for instance, assuming that all pharmacies charge the same amount.
Market and Educate All Year
The Summary of Benefits and Coverage (SBC) required by Obamacare was supposed to address this lack of education, serving as sort of an equivalent to the nutrition label on food items. That document has been changed several times as the government tries to improve its usefulness, and the continuing low healthcare literacy shows that the SBC has not yet fixed the problem, Buckey says.
She suggests that health plans should market to and educate consumers year-round rather than focusing almost exclusively on the open enrollment period as most currently do.
"We're seeing more and more employers move to what they call active enrollment, in which they require employees to make an affirmative decision about their coverage every year, trying to move them away from that passive acceptance that we see so much," Buckey says.
There is some evidence that health plans and employers are becoming more aware of the costs they incur from low healthcare literacy, she says.
"Healthcare is going to continue getting more complicated, so I think we will see more focus on addressing this healthcare literacy issue," Buckey says.
"There will be more drilling down to understand the needs of their audience, not just on the baby boomer versus millennial level, but looking at levels of education and targeting specific groups like young people moving off their parents' insurance and buying coverage for the first time."
By one estimate, incorporating extensivists fully into the primary care system could save 6% of U.S. spending on healthcare.
This article first appeared in the September 2016 issue of HealthLeaders magazine.
With primary care physicians already stretched to the limit but still facing demands to pay more attention to the patients requiring the most time and resources, some healthcare organizations are embracing an extensivist model that uses specially trained physicians and advanced practice registered nurses to provide comprehensive and coordinated care to patients with multiple complex medical issues.
Extensivists typically take their scope of practice beyond the hospital and into the home or other settings, with a focus on keeping patients healthier and reducing readmissions.
Some organizations incorporate extensivists into their primary care lineup, while others operate separate full-service clinics with extensivists, usually with small patient panels to allow a more intense focus on each patient. The impact of extensivists can be significant, with the global management consulting company Oliver Wyman estimating that incorporating them fully into the primary care system could save 6% of U.S. spending on medical care.
An extensivist model can address one of the biggest threats to patient safety and optimal outcomes—the patient handoff, says Arnold Milstein, MD, MPH, director of the Clinical Excellence Research Center at Stanford (California) University and medical director with the Pacific Business Group on Health, a not-for-profit business coalition based in San Francisco.
Milstein first came across the extensivist approach in the CareMore Model, developed by the CareMore health plan focusing on senior care. The model focuses on reducing the risks from handoffs and improving care after discharge. CareMore is an HMO/HMO SNP plan with a Medicare contract, based in Cerritos, California.
"Primary care doctors generally are not set up to respond to urgent occurrences, waiting for the patient to call them and feeling responsive if they can schedule the patient within a week of discharge," Milstein says. "With older patients, and especially with the shorter inpatient stays that are common now, they have a lot of needs after discharge and they can get in serious trouble fast."
Key to success No. 1: Look beyond discharge
The CareMore Model adopted the extensivist idea by dedicating an APRN or physician to care for the patient while admitted and well into the postdischarge period, providing in-home care nurses to support the physician's care plan. Milstein studied CareMore's experience and found that its extensivist model is effective for older and sicker patients, but not as much for patients under 65, with intact cognitive abilities, who are well educated, or with capable spouses able to help at home. An extensivist would be overkill for those patients, a waste of an expensive resource, he says.
"But with patients who are elderly, fragile, and without a good support system at home, if your intended processes don't go through as planned then things can go very bad, very fast," Milstein says. "With those patients the extensivist can make a real difference. No matter how well written your discharge note, with this set of patients the likelihood is high that a patient who was stabilized at very high cost in the hospital will suffer setbacks when you put them in their homes."
Data from the January 5, 2016, study "Delivery Models for High-Risk Older Patients: Back to the Future?" in The Journal of the American Medical Association, authored by Milstein; Brian W. Powers, AB; and Sachin H. Jain, MD, MBA, show that extensivists reduce both hospital lengths of stay (from 5.3 days to 3.7 days) and 30-day hospital readmissions (from 18.4% to 14.7%).
Milstein expects the extensivist model to be adopted more widely as Medicare and private payers continue pressuring physicians and hospitals to do more with less, particularly with the Merit-based Incentive Payment System kicking off in 2017.
Key to success No. 2: Forget productivity goals
The extensivist model is making a difference at Austin (Texas) Regional Clinic (ARC), which has 21 locations, with 18 providing primary care, says Anas Daghestani, MD, chief of internal medicine and medical director of population health and clinical quality. ARC developed an extensivist program that is located at two of its primary care clinics, in which a primary care physician works closely with a nurse practitioner and two RN case managers. A behavioral health counselor also is available to work with the extensivist team.
The model improves patient satisfaction and perception of health, says Daghestani. Unpublished research at ARC has suggested that emergency department visits and hospital admissions are lower for patients treated by extensivists, he says.
The extensivist clinic is not run on a productivity model, Daghestani says. New patients are scheduled for one-hour appointments, established patients for a half hour, and hour appointments are available for established patients as needed. That limits the patient volume to about half of the roughly 100 patient visits per week that are typical for a primary care physician, according to a 2014 productivity survey by Medical Economics.
High-risk populations have 24/7 access to a small team of RN case managers who get to know the patients well, he says. Those patients avoid the normal triage and clinician contact system, instead going directly to one of the case managers when they have questions or concerns. The extensivist team meets every morning for a huddle to discuss patient updates and schedules for the day and week, he says.
The geographical spread of the ARC system was a challenge for patients who originated in one of the other clinics, as well as the sense of abandonment that some patients feel when their care is transferred from their primary care physician to the extensivist team, Daghestani says.
"We had to tweak our message to convey that this is a consulting arrangement, a short-term arrangement even though it may last up to two years," he says. "We explained that this is an opportunity for the patient to benefit from extended resources."
Key to success No. 3: Anticipate financial challenges
Most patients end up appreciating the additional access and resources from the extensivist program, Daghestani says. The economics of the program can be challenging, however.
The concept does not work well in a fee-for-service environment because the resources offered increase while the patient volume is cut in half, he says. The model works well in a truly capitated system but will be challenging in many practices, he says.
ARC also plans to enhance the branding for the extensivist program to highlight the clinics as "transition of care" resources for physicians who have patients being discharged from the hospital, Daghestani says. That strategy is intended to address some of the financial challenges inherent in the extensivist model.
"When you are transitioning from fee-for-service to value and eventually risk-based reimbursement, eventually the model stresses out financially because you continue to add costs to the clinic and you're not pushing the volume up because that is not the concept," Daghestani says.
If the model can be sustained under the coming reimbursement changes, Daghestani expects the extensivist clinics to become ARC's "senior clinics," making the extensivist approach more of a natural evolution in care for the system's patients rather than a special and separate service. The senior clinics would be an extension of the primary care practice where more resources and support are available, he says.
Key to success No. 4: Consider a hospitalist/extensivist model
In some cases the extensivist takes the form of a hospitalist who is assigned to an admitted patient and then provides care after discharge before handing the patient over to the primary care physician, says David Meltzer, MD, PhD, chief of the Section of Hospital Medicine at the University of Chicago Medicine.
A primary benefit of the extensivist model is stabilizing the patient before the handoff to the primary care physician, he says. With the hospitalist/extensivist model, benefits can be realized without adding the expense of another healthcare professional.
"Every time you add more people, you have more costs and more coordination problems," he says. "If the hospitalist hands off to a care coordinator, and the care coordinator hands off to the primary care doctor, then you still have problems of coordination, costs, and good handoffs. The extensivist model gives you extended care coordination."
The University of Chicago Medicine had tried to improve the continuum of care by having the same doctor provide care in both the hospital and ambulatory care settings, Meltzer says, but there weren't enough patients at risk of hospitalization to justify the doctor's presence on a daily basis. With the emphasis on avoiding hospital admissions, a primary care doctor can be busy with patients in the clinic all day but have few patients in the hospital, which is typical in primary care, he notes.
"When you do have someone in the hospital, it's difficult to leave your busy clinic to go see them," he says. "It would be great for primary care physicians to go see their patients in the hospital every day like they used to, but if that's not possible, extensivists help fill that gap by providing some continuity of care from the hospital experience and back to the primary care physician."
Key to success No. 5: Adjust physician volume
Working from that premise, Meltzer and his colleagues pioneered the Comprehensive Care Physician (CCP) model—a model that shares similarities with extensivist programs, according to the January 2016 JAMA study—in which physicians provide both inpatient and outpatient care for patients at increased risk of hospitalization, leveraging the power of the doctor-patient relationship to improve outcomes and control costs. This model utilizes a subset of physicians who only see patients at high risk of hospitalization, making their panels small enough that they can provide all the patients' primary care in the afternoon and always have enough patients in the hospital to justify morning rounds every day.
Whereas a typical primary care physician may see 2,000 or more patients annually and have few ever admitted to a hospital, a physician in the CCP model may have only 200, Meltzer says. But because those 200 patients are quite sick, they are often in the hospital.
"We're making it possible for them to do what primary care doctors used to do, seeing their patients in the clinic and the hospital," Meltzer says. "And by doing that, we're improving that continuity of care so that there are fewer handoffs and we hope better outcomes."
Meltzer and his colleagues have been studying the results with 1,950 patients involved in a trial of the CCP model and expect to have results soon. Several hospitals have expressed interest in adopting the model, and some are taking the first steps in that direction, he says. Scale and efficiency are important in making the CCP model work, Meltzer says. The program has to be large enough to provide the patient volume necessary for the physicians to be successful, but it also must not grow too quickly.
"The trick in this model is identifying the patients at high risk of hospitalization and helping the doctors build up a practice that focuses on them," Meltzer says. "You don't want to overhire so that you have physicians sitting on their hands waiting for patients, but you can't under hire or the physicians will be overwhelmed and burn out. That would destroy the continuity in the relationship, which is the secret sauce that makes the whole thing work."
President Obama's meeting this week with insurance executives was either a pep talk or a desperate plea for them to hang on and not let his signature project fail.
President Obama's meeting this week with insurance executives shows that he understands that Obamacare is on loose footing.
The question now is whether President Obama has lost the faith of both insurers and consumers.
The meeting included leaders from Humana, Cigna, Highmark Health, Molina Healthcare and several Blue Cross Blue Shield insurers, along with Secretary of Health and Human Services Sylvia Burwell and senior adviser Valerie Jarrett, according to a statement from the White House.
The commander in chief also sent the companies a letter outlining what the administration is going to do next year to help them survive what is turning out to be a daunting insurance market for them and their customers.
In addition, Obama sent letters to each insurer offering exchange plans for 2017, saying he wanted to "underscore the importance of continuing the work that has helped bring the uninsured rate to the lowest level on record."
And he said he was seeking ideas on how to strengthen the marketplace. The letter sought to "emphasize the Administration's commitment to working with them, discuss recent actions to further strengthen the marketplace, and ask for their help in signing up uninsured Americans," a White House statement said.
"We know that this progress has not been without challenges," Obama said in the letter. "Most new enterprises have growing pains and opportunities for improvement. The marketplace, while strong, is no exception. Time and experience will help drive that improvement, as well constructive policy changes."
A Call for Radical Revision
Those "constructive policy changes" were not specified, but Obamacare needs radical revision and not just tinkering around the edges, says Elaina George, MD, an otolaryngologist in Atlanta and a member of the Project 21 leadership network at The National Center for Public Policy research. Small changes also are unlikely to improve the plight of consumers, she says.
"The projection is that it's going to get worse," she says. "Patients will have increasingly higher out-of-pocket costs and the insurance companies will continue to ratchet down what they consider to be medically necessary. Coverage options will drop, and physicians are leaving the insurance market and going to direct pay practices."
George points out that insurance companies are struggling in part because the administration did not follow through on one of its promises to them. When first crafted, the Patient Protection and Affordable Care Act had a provision for paying insurers if they could not get enough participants or could not stay profitable, he says.
"There was this pot of money they were supposed to be able to access, to make them whole," George says. "That was reneged on by the government and that's why we're seeing the exodus of the insurance companies, because they're not getting a bailout."
George also speculates that the biggest insurers are tempering their support for Obamacare because the Department of Justice filed lawsuits to block the merger deals between Aetna and Humana and Anthem and Cigna.
She believes the real solution for both insurers and consumers is to move away from Obamacare and toward healthcare that is not hospital-based, with an emphasis on transparency in costs. Freestanding surgical centers and other options that don't involve checking into a hospital should be the way of the future, she says.
So far Obamacare has caused a consolidation and centralization of healthcare, which is exactly the opposite of what needs to happen, George says.
"A lot of damage has been done in the healthcare system by consolidation," George says.
"I don't think government is the answer. I think that as long as we're allowed to have a separate free market system, with transparency, people will start realizing these other options exist and start to put pressure on the system."
Now that the FCC has clarified rules for contacting patients about payments, hospitals and health systems are risking multi-million dollar settlements by failing to take the law seriously.
This article was originally published on February 22, 2016.
A California hospital chain is learning the hard way that the Telephone Consumer Protection Act (TCPA), clarified by federal authorities last year, creates new hurdles for health systems that want to use cell phones as part of their debt collection efforts.
CFOs and revenue cycle managers must now ensure that they are in strict compliance with the limitations on cell phone calls, or declare a moratorium on all such calls until they can be sure, experts say.
In 1991, Congress responded to consumer complaints about telemarketing calls to their mobile phones by enacting the TCPA, which restricts the use of automatic dialing systems, prerecorded voice messages, and text messages. The medical debt collection industry was hindered by the rule and in the summer of 2015 asked the FCC to clarify the TCPA, hoping to gain more flexibility on the use of auto-dialing to cellphone numbers, among other issues.
The move backfired, however, with the FCC clarifying that debt collectors must obtain express consent before dialing a cell phone number.
Almost immediately after the interpretive ruling, lawsuits were filed against companies in a wide range of industries, and Prospect Medical Group's Southern California Hospital at Culver City recently became one of the first healthcare providers to be sued.
It is facing a class-action suit alleging that it used an automated dialer to call a patient on her cell phone about collecting a debt, without her express consent. The rule allows consumers to seek $500 in damages for each call made in violation of the statute or $1,500 for each call made willfully in violation of the statute.
Hospitals are Lagging
Hospitals and health systems are risking multi-million dollar settlements by failing to take the TCPA seriously, says Mary Lee DeCoster, recently vice president for revenue cycle at Maricopa Integrated Health System in Phoenix, AZ, and now vice president for consulting services at Adreima in Phoenix. While with Maricopa, DeCoster also served on the Healthcare Financing Management Association's debt collection task force, which addressed legal and ethical issues.
"Hospitals need to focus on adding language to that section of the conditions of admission where the patient agrees to be responsible for charges incurred. The language should be very specific, with the patient saying 'I agree that you may call me on whatever phone numbers I give you, including land lines, cell phones, Skype numbers, or anything else,'" DeCoster says. "Hospitals are lagging in getting that information into their documentation."
The challenge for many hospitals is that when a patient provides a primary phone number, it is not always identified as a cell phone, notes Diane Watkins, vice president for revenue cycle at Saint Luke's Health System in Kansas City, MO. With more and more people foregoing a land line and using their cell phone exclusively, Saint Luke's Health System revised the Consent and Agreement for Health Care Services form to include language regarding consent to contact.
"By signing the form, the patient consents to any phone number the patient provides to be used to contact the patient regarding any unpaid balance on their account even if the number is a mobile or cellular number," Watkins explains. "By communicating up front with our patients we set a shared understanding of how phone numbers are used and ensure Saint Luke's compliance with the rules."
Collectors are Skittish
DeCoster notes that collection agencies are becoming more sensitive to TCPA liability and will act in their own best interest if they do not have necessary data from the healthcare provider.
"At the back end, the collection agencies are hamstrung. They don't know if the hospital got that permission or not, and they are now starting to behave very cautiously," DeCoster says. "It is affecting their ability to collect."
Health systems should ensure that collection agencies are provided accurate information regarding which patients may be called on mobile phones, DeCoster says. That information could be captured as a data point in the listing that would give the collection agency the go-ahead to load that information into the auto-dialer, she suggests.
8 Things Providers Should Know
Understanding the TCPA is the first step toward compliance, and many healthcare leaders know less than they think they know, says Rozanne M. Andersen, vice president and chief compliance officer with Ontario Systems in Muncie, IN, which provides debt collection support for the healthcare industry.Andersen offers these facts about the TCPA:
1. It is not just about debt collection.
The same restrictions apply to calls reminding patients of an appointment, a test result, or any other message. If that call is made to a patient's cell phone, the TCPA requires express permission from the patient.
2. The TCPA does not require permission for all calls to a patient's cell phone.
A provider may call a patient's cell phone as much as it likes, even without the patient's permission, as long as an auto-dialer is not used and no pre-recorded messages are left.
3. Avoidance of auto-dialed or prerecorded messages does not assure compliance.
If a provider's debt collection agencies or other vendors use non-complaint methods, the provider can still be held responsible for violations of the TCPA.
4. Consent is provided when the cell phone number is obtained.
When the subscriber to the phone service or the customary user of the phone provides the cell phone number to the provider, that person is providing consent to be contacted at that number by the hospital or health system, its accounting department, its collection agencies, or anyone else calling on the provider's behalf. Providing the cell phone number is considered express consent to call and to use auto-dialers and recorded messages under the TCPA, Andersen explains. But if the cell phone number was obtained in any other way, there is no consent.
5. It is always a good idea to get written consent anyway.
Obtaining written consent should not be difficult because providers can add a statement to the admission forms that grant the provider permission to reach the patient at any number provided. Even better would be a statement such as "I hereby provide you my mobile number to communicate with me regarding my treatment or services rendered." The courts have made clear that providers do not have to state explicitly that the permission includes the use of auto-dialers and pre-recorded messages, Andersen says, but acknowledging that those methods may be used could provide an extra layer of protection.
6. A cell phone number in the patient's record does not necessarily include consent. For instance, if a spouse or friend fills out the paperwork for a patient admitted through the emergency department, it is not safe to assume the healthcare provider has consent for that cell phone number. The TCPA says consent comes when the subscriber or customary user provides the number, and though a person may be authorized to act on the patient's behalf regarding the paperwork, it is risky to assume there is consent for cell phone contact.
The best course of action in that situation may be to employ a method of scrubbing all such ED-originated cell phone numbers from records before they are entered into the main system, or to flag them as potentially problematic. For instance, cell phone numbers originating in the ED could be automatically blocked for use until someone manually calls that number to confirm that the patient consents to its use.
"Front door admissions I don't lose much sleep over, but with numbers you get through the ED, who knows who you're calling?" Andersen says. "There's just too much chance that someone is going say they never wanted that number given to you and you didn't have permission to use it.
7. Consent does not transfer from one episode of care to another.
If a patient gave her cell phone number during admission for a tonsillectomy in 2013 but not when she was admitted for a splenectomy in 2015, the provider does not have consent to call that cell phone number with an auto-dialer or prerecorded message regarding the splenectomy. This can be an easy pitfall for providers, Andersen says, because when patient data is merged, there may be no indication when and how the number was obtained.
8. The TCPA requires that revocation of consent be documented.
The FCC's recent clarification of the TCPA indicates that any user of a cell phone number has a duty to track and record revocation of consent. If anyone in the organization contacts the patient by cell phone and the patient says he or she doesn't want to be contacted by that number anymore, the provider must immediately document that revocation. Then the provider must have a process by which the number is removed from its systems or flagged as unusable, Andersen says.
Court rulings in favor of plaintiffs in TCPA cases are usually small. But for lawyers and corporations, the losses costs can be in the millions.
"In 2014, the average consumer received $4.12 from a TCPA class-action settlement. Plaintiffs' lawyers received an average of $2.4 million," according the Wall Street Journal. TCPA lawsuit settlements with Walgreen's Pharmacy over the last two years totaled $11 million.
Large health systems and hospital operators are reporting falling profits, revenue, income, and share value. The promise of population health management may eventually restore financial order, says one industry expert.
This article was originally published on March 10, 2016.
It has not been a good revenue year so far for health systems and hospital operators. Some of the largest players report massive slides in profits and stock prices.
The good news, analysts say, is that health systems will see a turnaround once the industry more fully adopts the value-based care model.
The bad news is that probably will take a while.
In February, the 2015 annual and fourth quarter financial results from Kaiser Foundation Health Plan, Kaiser Foundation Hospitals, and its subsidiaries showed a $1.2 billion drop in profit year over year. Kaiser's net income was $1.9 billion in 2015, compared to $3.1 billion in 2014.
Community Health Systems, the country's second-largest chain of for-profit hospitals, also reported falling revenue. On February 15, the company's stock fell 22% to $14.53 and had dipped as much as 31% to $12.86, marking the lowest intraday price for Community Health since December 2008.
Community's shares lost more than 75% of their value since hitting a 52-week high of $64.04 on June 26, 2015. Tenet Healthcare also reported in February that its financials were down 5.9% at $22.58.
The falling profits are a side effect of the healthcare industry's move to value-based care, says Jeff Hoffman, senior partner and health care strategist in the global management consulting firm Kurt Salmon's Health Care Group.
"This is an awkward and ironic in-between time. The shift to value-based care tasks hospitals with reducing the number of procedures or inpatients for which they now receive payment and instead be pre-paid or receive a risk payment," Hoffman says. "That's not traditionally a recipe for profit growth. But there are ways to make it work. There just aren't any fast solutions."
Industry in Transition
Reimbursement shifts are taking longer than most providers expected, Hoffman notes. Most are focusing attention on the expense side, he says, removing unnecessary procedures and imaging, and developing protocols for better and more efficient care. Some of this does have a negative revenue impact, as well, he notes.
Providers are investing in value-based care delivery models, but the large payoffs on any significant scale haven't come yet, Hoffman says. Meanwhile, new technologies to improve care and patient access, such as telemedicine, cost money. Providers are also buying primary care medical groups and refocusing their processes and protocols to create narrow networks that serve defined populations.
That's a huge expense that will continue to drain health system resources, whereas achieving real value under population health models remains elusive for many as health systems struggle to manage chronic patient populations and transitions into, and from, post-acute environments, he explains.
"Remember that one of the major goals of value-based care is to improve the outcomes and reduce the total cost of care as well as each individual episode of care. And ironically, it costs a decent amount of money and significant time to set up the health partnerships and technologies to make that work," Hoffman says. "So for a long time, healthcare providers will be trying to reduce the number of customers they have and how much those customers pay. That's not a recipe to increase profits."
But once those base investments are made, Hoffman says, health networks can start driving new sources of revenue, use data analytics to target care to individuals who use an outsized amount of the network's resources, and even create their own insurance plans or partner with insurers to target their narrow network populations. That's the promise of population health management, which is distinct from value-based care and which most providers won't achieve for some time, if at all, he says.
"So we're unlikely to see profits jump back up in the near term, but once the leading healthcare entities start diving into capitated risk models, we will see those organizations finding new ways to drive profits in the new value-based health care paradigm," Hoffman says.
Pressures Mounting on All Providers
The falling profits are not surprising in light of the ongoing reimbursement pressure and increasing competition, says Chad Sandefur, a director and healthcare analyst with AArete, a management consulting firm that helps companies increase profits without reducing headcount.
"The top line is affected by challenges in reimbursement, whether that comes from CMS or the new contracting mechanisms in the market. The portion of receivables from Medicaid also affects the quality of the top line," Sandefur says. "Added to that are various incentives and penalties regarding value-based purchasing, readmissions, quality indicators. When you factor in that up to 10% of reimbursement from Medicare can have a penalty associated with it, you're going to continue to see a challenge to the top line."
All sectors are affected by those pressures, but Sandefur says the impact may be greatest on independent or community-based facilities that have not aligned with larger healthcare systems, urban facilities that have a large Medicaid population, and children's hospitals that traditionally have been supported largely by foundations. For-profit health systems usually have the advantage of greater size, which gives them the ability to negotiate favorable terms in the market and to more easily absorb financial setbacks, Sandefur says. They also have the capital to invest infrastructure, such as IT systems and standardized purchasing, that allow them to be more efficient and squeeze every penny out of their reimbursement.
Nonetheless, the recent profit slides from Kaiser and other big players demonstrate that no one completely escapes these pressures, Sandefur notes.
More of a Reset Than a Trend
Successful health systems with regional strength will turn the tables on payers, Hoffman says, and set the terms for narrow networks and direct-to-employer contracts to secure and grow share, manage appropriate utilization, and take more risk—and share—of the premium dollar.
Hoffman doesn't think the drop in profits is a trend so much as a reset. Healthcare providers need to adapt to the reality that no hospital, no doctor, and no medical device manufacturer or pharma company will be able to charge what they previously could, he says. Every player in the healthcare industry is now tied into this new paradigm where value must be defined and measured before anyone is compensated.
"Will we see some players grow, gain market share, justify that value, and increase profits? Absolutely. In high-population centers, for example, health systems that embrace retail, digital and telemedicine platforms will realize big gains in brand value and set the stage for essentiality to shift from physical assets to service and results," Hoffman says. "But the industry overall cannot sustain the costs it's seen to date."
Hoffman expects provider merger/acquisition and partnership activity to remain strong in 2016 as providers continue to partner in an effort to achieve scale, especially in response to the market transition to value-based care. Federal and payer challenges to hospital asset mergers and even virtual mergers will force many health systems to revisit vertical (payer and medical group) integration as an alternative foundation of their strategy, he says.
"One place we might see quick changes in response to reduced profits and reduced revenues is in the pediatrics space. Downward financial pressure means community hospitals will face the closure of their NICUs and smaller pediatric programs, and children's hospitals will step in to either manage these units or create new capacity on their own campuses," Hoffman says. "Simultaneously, integrated health systems holding on to their pediatric platforms will look to freestanding children's and academic medical centers for subspecialty support."
Partnerships across key pediatric programs, and across state lines, will broaden research populations, and further advances in pediatric research will require a push for even greater collaboration in the future, Hoffman predicts.
Sandefur says the healthcare players that come out ahead will be the ones that effectively manage both the top line and the bottom line. Managing the expense side of the equation will be just as important as working to bring in more revenue, he says.
"It will be critical to know the costs to treat your patients, knowing the cost of service lines, the cost to compete in the market," Sandefur says. "That's why we're seeing heavy investment in predictive analytics, business intelligence, and the data around population health management. It allows the better health systems to make smarter decisions."
MACRA effectively killed the much-despised SGR, but it will usher in changes that will destroy the fee-for-service model.
UPDATE: On September 8, the Centers for Medicare and Medicaid Services released four options offering physicians flexibility complying with the MACRA's requirements.
The law aimed at revising how Medicare pays physicians will reinforce the move toward value-based models, pushing the healthcare industry a big step closer to what health plans have promised for years but not quite delivered, one healthcare executive says.
Healthcare plans should be preparing for what could be a radical shift, says Ray Desrochers, executive vice president of HealthEdge, a company providing software management for payers.
Attention to the Medicare Access and CHIP Reauthorization Act (MACRA) has focused largely on the implications for small-practice providers and a potential delay in implementation, but Desrochers says MACRA really is a "Trojan Horse" for value-based models, quietly introducing changes that will destroy the fee-for-service model.
When MACRA was signed into law in April of 2015, it was welcomed as the solution to the much-despised Sustainable Growth Rate (SGR) formula that threatened every year to cut physician compensation to unreasonable levels.
But there is no doubt MACRA also will move the industry away from traditional fee-for-service payments by limiting aggregate Medicare physician payments to a 0.5% increase per year through 2019.
Additionally, 4% of a physician's annual Medicare payments will determined by either the Merit-Based Incentive Payment System (MIPS) or participation in Alternative Payment Models (APMs).
CMS will begin using the new system on January 1, 2017, with data from physician performance that year used to determine bonus and penalty payments effective in 2019.
Health plans have not adopted risk-bearing contracts to a significant degree, but CMS intends for them to make up 25 to 75 percent of all plans by 2023, Desrochers notes.
"The transition to value-based care will involve significant challenges in people, processes and technology," he says. "It's a major complexity issue for paying claims, one that can ultimately result in claims-paying issues, causing cash-flow issues for small practices, surprise medical bills for patients, and other headaches."
Healthcare insurers are starting to assess where they will fit into this new world, Desrochers says.
"A number of them are scrambling, asking how they can possibly meet the needs of a variable world where it is not one-size-fits-all, and I have to deal with each provider in a different way," he says.
"You will have situations where providers are paid differently according to their compliance and when they call to ask why they got a different rate, it's not going to be easy to explain what led to that determination."
Many insurers first addressed MACRA, value-based models, and risk-bearing as modifications to business as usual rather than wholesale changes, Desrochers says. Their plan was to just get through the transition.
"What they're realizing now is that this is a level of change that this is much more than that. This is a level of change that is fundamental," Desrochers says. "We don't have all the answers yet for how it will affect providers and payers, but we do know that MACRA is about a lot more than Medicare."
MACRA will give providers reason to pressure insurers to adopt similar models, Desrochers says.
"Providers will be incentivized [as] to how they care for the Medicare population, but at the same time they will be given credit for providing the same level of care to their commercial population," he says.
"That is so important because the Medicare population tends to be some of their lowest margin business. If they can go out and create an advantage for themselves by complying with some of these new rules on their commercial populations, you can bet they're going to do that."
Concerns over the survivability of the insurance exchanges and concerns from insurers appear to have spurred CMS to propose changes to Obamacare and to its method of risk adjustment.
The Centers for Medicare & Medicaid Services is moving to save Obamacare after the retreat of major insurers from the health insurance changes, proposing changes to the marketplaces and the law's method of risk adjustment. The changes may do little to satisfy the insurance companies that have found little success so far with Obamacare.
The changes in the proposed rule have been sought by the insurance industry for some time now, but it appears CMS may be closing the barn doors after the horses have bolted.
CMS issued the proposed annual Notice of Benefit and Payment Parameters for 2018 a couple months earlier than expected, another hint that the agency is responding to recent signs that the marketplace is failing fast and may be beyond hope of recovery.
Recent concerns over the survivability of the exchanges and concerns from insurers seem to be motivating CMS, says Morgan J. Tilleman, JD, a healthcare attorney and analyst with the law firm of Foley & Lardner in Milwaukee, WI.
"This year, large risk-adjustment payments have been blamed for exacerbating the financial struggles of some co-ops. Also, a number of lawsuits have been brought against HHS and CMS alleging that the risk adjustment formula is unfair to some issuers," Tilleman says.
"While CMS was likely going to change some of the features of the risk adjustment formula and process regardless, the controversy swirling around risk adjustment may have impacted CMS's timeline and focused attention on this issue."
The permanent risk-adjustment program is intended to compensate plans for taking on sicker enrollees with higher healthcare costs. A frequent complaint from insurers has been that the risk adjustments do not take into consideration the use of prescription drugs that make patients appear healthier than they actually are.
CMS responded by proposing that, starting in 2018, risk adjustment would factor in prescription drug data in addition to all the other conditions and illnesses used to develop a risk score. Some skeptics have said that might incentivize physicians to write unnecessary prescriptions.
"Just measuring inpatient and outpatient treatments would fail to capture these expensive conditions. However, it remains to be seen whether this change will materially change the distribution of risk adjustment payments," Tilleman says. "I don't see this change as providing a meaningful incentive to doctors to prescribe more medications, however. On a day-to-day basis, I doubt most physicians are thinking that abstractly about the financial condition of health plan issuers."
The proposed rule also would require insurers to offer a silver and a gold level plan on the exchanges, and Tilleman doubts that would go over well.
"In general, forcing insurers to offer more plans makes it more difficult to attract new issuers to the exchanges and to retain issuers currently offering coverage on the exchanges," he says.
"If an issuer believes that it can offer silver plans at a profit, but will lose money on gold plans, this requirement could deter that issuer from entering or staying in the exchanges."
Tilleman also suspects that the pending congressional lawsuit against cost-sharing reduction payments could put issuers with silver plans in a very difficult position. Silver plans with extensive cost-sharing reductions are very "rich" in terms of actuarial value, but have silver-level premiums, he notes.
If the courts delay or prevent the payment of cost-sharing reductions, these silver plans may become wildly unprofitable at the filed premiums, particularly if the cost-sharing reduction payments are stopped mid-year, he says.
The impact of the proposed rule is uncertain, but Tilleman cautions against reading too much doom and gloom into the CMS effort.
"CMS is dedicated to the success of Obamacare and must be feeling the pressure to improve its stability," he says. "However, every large federal health program has been the subject of this sort of adjustment, and those programs, such as Medicare Advantage and the Part D benefit, survived."
Putting a financial burden on enrollees helps them understand the true cost of care, says an executive at a healthcare financial management platform.
There aren't a lot of people defending high deductibles for health insurance, but count Jeff Bakke, chief strategy officer of WEX Health, as one of them.
High deductibles are generally a good thing because they force buyers to be more cost-conscious, says Bakke, whose company provides cloud-based financial management services for healthcare providers.
"We've needed to go on a healthcare spending diet for a long time, and high-deductible plans are the way to get patients and consumers super engaged in what things cost," Bakke says.
"It's one of the few things where people don't think about the cost. They just act, and sometimes not in their own best interest or the interest of the third party that is paying for those things."
The trend to higher deductibles has been led mostly by employers, not health plans, Bakke notes. "They see it as a way to stop their employees from acting like everything is free," he says.
High deductibles are here to stay, Bakke says, because employers cannot meet the coverage mandates of the Affordable Care Act without significantly cutting back on their employees' healthcare costs.
If everyone has to be covered, then everyone will receive fewer benefits. But that is not necessarily a bad thing, he says.
Setting the Stage for Better Choices
"For employers who had different populations with different benefit levels, high deductibles are a way to normalize that," Bakke says. "For a lot of companies, it is not the attractive option—it's the only option. And it is a way for employers to help younger employees start to save for these future expenses."
It is not unusual for employers to save as much as 20% on healthcare coverage by using high deductibles, but these savings don't result from employees having to pay more to cover their deductible. The savings are the result of getting the consumer to appreciate how much healthcare costs and to make better choices, he says.
Health plans certainly benefit. High deductibles can help insurers fend off overutilization, which can pull any health plan into the red—although they couldn't save Aetna and other large companies, which cited higher than expected utilization costs as the reason they pulled out of Obamacare exchanges, online marketplaces for health insurance.
Without the high deductibles, those Obamacare exchange plans would have crashed much sooner, Bakke says, but even extremely high deductibles can't compensate for procedures that cost hundreds of thousands of dollars.
"People who haven't been insured before are very high cost," he says. "I heard that one of the plans had more transplants in 2014 than they had had in the entire 35-year history of the company."
